$AET, Aetna Will Not Reinstate Cancelled Individual Health Insurance

Aetna Inc. (NYSE:AET) will not reinstate or extend individual health insurance plans canceled with the advent of the Barack Obamacare, aka Affordable Care Act (ACA), because the time frame is too short.

Aetna is the largest insurer to announce a decision on how it would proceed across the US after President Barack Hussein Obama said last month that insurers could extend these healthcare plans under a temporary transitional policy.

Aetna’s move means that its customers whose plans are cancelled, and who are required to have health insurance in Y 2014 or pay a fine, will need to buy a new plan for Y 2014.

Aetna CEO Mark Bertolini made those comments at an investor meeting Thursday.

Aetna is the 3rd-largest US insurer, Friday it declined to say how many individuals have plans that are being, have been canceled, or how many were offered early renewals on their expiring Y 2013 plans to enable them to continue coverage into Y 2014.

The company would have had to seek approvals for rate increases across the United States, which it said would distract it at a busy time of year according to its CEO’s statement.

Aetna’s move is in contrast to some state-based Blue Cross Blue Shield plans, such as BCBS of Florida and BCBS of North Carolina, which all have said they would extend these plans under the transitional policy.

Mr. Obama made the policy change allowing insurers to extend health plans under a temporary policy after hundreds of thousands of individuals received notices that their plans were being canceled. The cancellations became a political issue because Mr. Obama had promised Americans on several occasions that if they liked their plan, they could keep it. That vow turned out to be untrue.

Aetna said that it has offered early renewals on plans, which allow consumers to keep their coverage for up to a year longer and into late Y 2014.

“We talked to the insurance commissioners and the insurance commissioners agreed with us. If we were to go to all those states, refile all those plans, refile all those rates and do it in time for 23 December, we would have paid attention to nothing else,” Mr. Bertolini said.

Consumers must decide whether to buy plans on the exchanges by 23 December for coverage to start on 1 January 2014.

Aetna is offering plans in 16 states, which means it covers about 30% of the exchange marketplace.

The exchanges, created under the Affordable Care Act, opened on 1 October to sell plans for Y 2014. HealthCare.gov technology problems have curtailed the ability of consumers to sign up and highlighted the insurance cancellation issue.

Some state insurance commissioners say they will not allow these plans to continue, while others say they would allow insurers who rushed early renewals in by 31 December to continue them in Y 2014.

Other state commissioners have left it up to the insurers to decide.

A few million plans are due to be canceled in Y 2014 and it is not clear yet how many people will lose coverage.

Aetna said it expects to gain customers in only about 15% of the market where it is priced the most competitively.

Mr. Bertolini said he expects the public health insurance exchanges, which are under attack by Republicans, to survive the technology issues.

“By 2015, if we get it fixed right, it’ll be a new start,” he said.

In addition to the website’s front-end problems, the website has also has problems communicating data about enrollees to the insurance companies.

The Obama administration said last week that over the 1st 2 months running the exchange, 1 in 4 (25%) transmissions had errors. That rate is now about 1 in 10, the White House said.

Aetna said it is still seeing these problems, but could not provide an estimate of how many submissions have errors.

Aetna CFO Shawn Guertin said he is worried about consumers being confused about whether they are enrolled in a plan.

“With where we are now it inevitably will happen,” Mr. Guertin said in an interview. “We tried to extend our payment dates to head that particular situation off, but when you look at the number of applications that we have and you look at the number of people that have actually paid for 1 January coverage, it’s a relatively low number as a percentage.”

“It does worry me a little bit whether people actually understand they have to pay that first month’s premium,” he said. Aetna has extended the payment date to 8 January for 1 January coverage.

Mr. Bertolini said it is important to get the information right in time for January and that the company has been working closely with the Obama administration.

“We’re coming up with workaround solutions in case things are not ready,” he said. “There is a lot of that cooperation going on now, whereas in the past it was pretty much hands off, but once the stuff really hit the fan there was a lot of engagement.”

Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations.
Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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